As your family grows you’ll need to reevaluate your insurance elections and update accordingly. Risk management may be the last thing on your mind when your child is first born, but it’s actually an urgent matter to take care of sooner rather than later.
Start thinking about health insurance long before the baby arrives. Find out about copays, deductibles, and premiums before you start going to doctor’s appointments and having diagnostic tests done. You’ll also need to determine how much of the delivery costs are covered as well as the baby’s coverage after it’s born. If both parents have employer health benefits, examine the plans together to decide which plan is best for your new baby. Once the baby is born, don’t forget to actually add him or her to your health insurance plan. Babies are usually covered under their mother’s insurance for a period of time following the birth, but make sure you add the baby within 30 days, or else you may have to wait until the next open enrollment period.
Now that you have a child depending on you, you’ll need insurance to provide for your family if your income is lost. You should also take out a life insurance policy for your spouse even if he or she stays at home to care for the child—take into account the value of a stay-at-home parent’s services and how much it would cost to pay someone else to do it.
Calculate how much life insurance you’ll need based on your salary and lifestyle. Your plan should cover several years of your salary and any debts you have, plus extra to pay for things such as your child’s education or your burial costs. You’ll also have to choose between term life insurance and whole life insurance. Term life insurance is much more affordable and provides a death benefit if the policy holder dies within the term period. You can choose your term based on the number of years your dependents will need financial support from you. Whole life insurance is more expensive but it’s also an investment, so you can receive money back if you survive the coverage period.
Other Insurance Considerations
During your prime income earning years, you’re much more likely to suffer a debilitating accident or disease than you are to die. This makes disability insurance equally important to ensure your family’s financial well-being. Your auto insurance also might need updating when you become a parent. If you’re upgrading your car to accommodate a car seat, you’ll probably end up paying more to ensure the larger car. You may also qualify for a safe driver discount just by becoming a parent, because new parents are statistically the safest drivers on the road. If one parent quits his or her job to stay home with the child, your insurance premium may go down as well. You may also want to increase your liability coverage after you have a child. Installing a play set in the backyard or driving your child’s friends in a carpool, for instance, will increase your liability risk.
One of the most important things you can do is add your new baby as a beneficiary on all of your insurance and benefits plans, and make sure each member of your family has adequate coverage. Once your risk is sufficiently managed, you can relax and enjoy your growing family.